Human embryonic and induced pluripotent stem cell research has opened up incredible new possibilities for generating therapeutically useful tissues. In addition, pluripotent stem cell derived tissue can be used for performing basic scientific studies into the mechanisms of development and disease, as well as drug screens to determine the efficacy of a drug in a target tissue of interest. However, there are still several significant obstacles that prevent therapeutic use of these cells. One such hurdle includes the fetal and immature nature of numerous PSC derived cell types, which do not have the full functionality of their in vivo counterpart. It is widely believed that derivation of more functiona cells and tissues in vitro will depend on mimicking the in vivo development of these tissues as closely as possible. This includes recapitulating a 3-dimensional, complex, multi-lineage development that drives normal organogenesis. We have recently used a 3-dimensional approach to generate functional intestinal tissue and believe that a similar approach will allow generation of other organ derivatives that have more functionality. In this proposal, we will use a 3-dimensional approach in attempts to generate lung tissue from embryonic and induced pluripotent stem cells. Our approach will utilize an innovative method we have developed to generate 3-dimensional foregut tissue that can, in theory, be directed to differentiate into any ventral foregut derivative (lung, liver, pancreas, Biliary system). By mimicking embryonic lung development, we intend to direct differentiation of human pluripotent stem cells first into 3-dimensional embryonic-like lung progenitors (spheroids) and then in to more mature lung-like organ units (organoids). To successfully achieve these goals, two aims will be pursued: 1) Determine robust conditions to induce 3-dimensional lung progenitor organoids from hPSCs. We hypothesize that stimulating WNT and SHH signaling in human foregut spheroids and in human foregut monolayers will induce NKX2.1+ lung progenitor spheroids. 2) Determine conditions that stimulate expansion and lung-specific differentiation of foregut organoids. We hypothesize that stimulating WNT and FGF signaling will create a supportive and permissive environment for 3-dimensional lung progenitor spheroids to expand and grow into mature lung organoids. Based on preliminary studies, we are confident that the aims proposed herein are achievable and will broadly impact the lung biology field by generating a new tool to investigate the mechanisms of human development and disease in human tissue. For the first time, a 3-dimensional system will allow unprecedented studies of human lung development and disease, including genetic gain- and loss-of-function. Furthermore, lung organoids can be used to study molecular regulation of differentiation into specific cell types within the lung and may advance our understanding of how to generate therapeutically useful, lung-specific cell types for transplantation.